Battle for hearts and wallets

The market at the moment is one that is a mixture of ever greater competition and decreasing demand and purchasing power. Brands are trying to surprise the customer once again and guess their preferences and adapt to them. A growing number of tenants are refitting and redesigning their stores. Chains that have recently changed their look include Vistula (the Red' concept), Sizeer (the so-called ?green wall including real plants' style), Diverse, Duka (Kitchen Life'), Swarovski (?Crystal Forest'), Stradivarius (Light Box'), Rossmann and Sephora. And this is not all that's happening. Some tenants are not only refreshing the look of their boutiques but are also coming up with new retail ideas and personalising their offer. This has been the case with Wittchen (Wittchen Shoes), Big Star (Big Star Shoes & Accessories), Tesco (Tesco Extra, F&F), Empik (Empik Café, Bread & Butter), Smyk (Smyk Megastore), Douglas (House of Beauty) and City Sport (City Sport Life Style). H&M will soon introduce a new line called ?Collection of Style', while a new brand owned by the LPP group is to make its debut in shopping centres in 2013. Bio Bistro in the Organic Farma Zdrowia delicatessen will soon be offering fair-trade coffee and snacks. Jerónimo Martins Polska, the owner of the Biedronka chain, is also widening its offer. The company has already launched a number of perfumeries under the name of Hebe as well as piloting its Kropka Relaks cafés.

Two brands are better than one
There are as many ideas for possible changes as there are brands, and each has its own concept. Some focus on refits, others change their collections, reserve space for new products or even open separate salons with new assortments of goods, such has been in the case with F&F, a Tesco brand. Clothes with the F&F label are available in Tesco hypermarkets, but the retailer has now decided to create a separate concept for this offer. The first boutique under this brand has been operating in the Blue City shopping centre in Warsaw since March. "This solution is meant to revolutionise the sale of clothes over large-format areas. Poles are not used to buying clothes in hypermarkets for a number of reasons: they believe they are cheap, of low quality and not branded enough. What we offer to our customers is a reasonable price level and a quality which is comparable to recognised brands available in many shopping centres. We want the F&F brand to be even more recognisable than now; we often hear from our customers that they like the concept very much as well as the frequent changes of collections, the quality of the finishing and, most of all, the affordable prices. We will be developing F&F mainly through the channel of existing Tesco stores, but we are also planning for some salons to appear as easily recognisable boutiques in their own right in selected shopping centres," reveals Piotr ?Korek, the vice-president of the management board of Tesco Polska. And this will not be the end of the innovations the operator is planning to introduce into its business. "A new Tesco Extra format, including themed sections such as Health & Beauty' or an extended gastronomy offer called Bistro', along with free of charge access to the internet, is a sensible way to use space - a solution which allows us to be more attractive for customers, represents the right answer to the turmoil on the market, and steals a march on the competition. Tesco Extra is a format that will have additional services added to it in the future, such as financial services. Even today we are offering Tesco insurance, credit cards and the financing of purchases in cooperation with our partners, and this might evolve towards Tesco Bank, just as it has already done in the UK," explains Piotr Korek.

What sort of hopes are being pinned on to the new business models? They are certainly substantial. Companies cannot simply sit back and wait for things to get better. "A remedy for the decrease in revenues could be, in the case of hypermarkets, a reduction of their areas and the streamlining of their operations at the same time. A better idea involves a creative approach to the concept, being ahead of and creating customers' expectations, as well as developing a format that will win them over and, most of all, their long-term loyalty too," suggests Piotr Korek. He also points out that the improved Tesco Extra format generates a 15-20 pct y-o-y increase in revenue. Bistro', which is a Polish concept, has also contributed to the growth in turnover and the number of customers - and it will now be copied by Tesco outlets in Great Britain.

Jerónimo Martins is another retailer to opt for a diversification of its business. Not only does the company run the discount store chain Biedronka, but it has introduced its Hebe drug stores, which offer cosmetics of well-known brands, perfumes, make-up products, accessories, jewellery and fresh flowers. Make-up and manicure stalls have been set up inside the shops where consultants advise customers on the art of make-up. The Portuguese company has announced that Hebe outlets will be opened in the biggest cities and towns in Poland as individual shops or in shopping centres. There are currently 16 such stores in operation, in locations such as Warsaw, Legionowo, Mława and Rawa Mazowiecka, as well as one in Galeria Kociewska in Tczew. "The format we have devised has been positively received by our customers and is why we are continuing to carefully monitor the outlets that have already been opened, but we are also analysing potential locations which fit in with our criteria. The project will be continued based on the experience gained from the first and subsequent Hebe outlets," claims Wiesław Ciuruś, the general director of Jerónimo Martins' drugstore and pharmacies division. Hebe salons typically have areas of around 300 sqm. But the company is not stopping with the opening of drug stores. It has also entered the catering business with its Kropka Relaks ?cafés line. "Three such cafés have already been opened - on ul. Korotyńskiego in Warsaw, in Skierniewice?and in Sochaczew. The first was opened last year. However, we would like to emphasise that the project is at the stage of being tested out. It is too early to speak about our next moves in this area," stresses Wiesław Ciuruś.

Always in fashion
Opening a new branch of a company is a costly and complicated operation. The construction and launch of an F&F type shop costs around PLN 1 mln. Other tenants, therefore, are trying to change in a visible way, but as part of their core business. This is the reason for so many store refits - involving a refreshing of the interior and the offer at the same time. An example of such an approach is provided by Duka Polska. Firstly, the company is currently carrying out a redesign of its stores according to its ?Kitchen Life' concept, which has been developed by the headquarters of the company in Sweden. "We have been carrying out the implementation work and are now looking for solutions to make the shop teem with life. We would like our brand to be associated with the kitchen, cooking and everything related to "kitchen life". In order to enhance the effect we have introduced a new line called Duka Coffee', which enables the customer to prepare an espresso coffee for themselves," declares Dagmara Dyba of Duka Polska. The first self-service coffee machines have been installed in six shops located in Warsaw shopping centres, such as Arkadia, Wola Park and Złote Tarasy, as well as in the Kaskada mall in Szczecin, Silesia City Center in Katowice and Galeria Kazimierz in Kraków. Dagmara Dyba makes no bones about the fact that the idea is meant to attract new customers and encourage loyal ones to visit more often, as well as to keep them in a given store for a longer period of time. "We are not counting on generating a direct profit from selling the coffee, which costs PLN 3 in our stores. The concept involves marketing objectives, such as the identification of the Duka brand with the growing trends of modern cooking and the coffee drinking culture," explains Dagmara Dyba. So far it is not clear whether the concept is working. "The project is at a preliminary stage. It will be still some time before the effects of Duka Coffee can be analysed properly. At the moment we know for sure that the coffee is popular and we have once again provided a pleasant surprise for our customers," adds the representative of Duka Polska.
Douglas is also re-styling its perfumeries, developing a concept called the Douglas House of Beauty'. According to this concept, the perfumeries will not only offer cosmetics but also the possibility of using care and spa treatments as well as participating in make-up training sessions. Its salon in Warsaw's Arkadia also includes a separate section for men, where they can have a rest, drink a cup of coffee and watch a match on TV. Moreover, the so-called Zen Lounge' has been introduced, i.e. a separate relaxation zone with comfortable armchairs, coffee and calm music. There is also a special area for learning how to apply make-up. What is all this in aid of? "To adapt to customers' needs, the location and the city. The perfumery format depends on what sort of customers visit a given centre, what their expectations and needs are," explains Agnieszka Mosurek-Zava, president of the management board of Douglas Polska. The biggest House of Beauty operates over an area of 1,200 sqm in Warsaw's Arkadia. The same concept, but over a smaller area, has also been adopted in Szczecin (Galeria Kaskada), Kielce (Galeria Echo) and Wrocław (Galeria Dominikańska). "Our success in these locations has convinced us that it is worth introducing the concept in other towns and cities," adds Agnieszka Mosurek-Zava.
Refits and modernisations have a positive impact on a centre's image, as it will then feature a number of refurbished shops looking as if they have just been opened. The lease of additional space and extending the scope of services is also a bonus in terms of the rents as well as the image. "Refurbishing shops and the development of new brands by tenants are very good from the point of view of facility managers. Refurbished shops are more attractive for customers, while new concepts, particularly those regarding their interior design, attract customers and influence their purchasing decisions," says Monika Pyszkowska, the director of Galeria Kaskada in Szczecin, which has been developed by ECE Projektmanagement. A revival on the tenant market and the growth of new brands by retail chains in turn help to stimulate the whole sector. "If a centre wants to extend its offer, inviting a new brand to cooperate with it is an excellent idea to enrich the offer of the mall," believes Monika Pyszkowska. New concepts revive the market, while the development of brands enriches the offer of shopping centres and supports the work of facility managers. Shoppers are more willing to visit stores that stand out with a modern look. And spending money in such interiors seems less painful.

The Retail Concept of the Year
The Eurobuild Awards 2012 Gala will for the first time feature awards in the Retail Concept of the Year category. The category is open to shopping centre tenants who have implemented imaginative changes in their business profiles in 2012, involving store refits, ?introducing new ideas for product sales and devising new retail ?concepts for the company. The jury is to include shopping centre developers, investors, facility managers and agents.

Aneta Cichla